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Churm: Good morning. I’m Steve Churm, CEO of Churm Media and executive editor of OC Metro and welcome to a special edition of the OC Metro Minute for Wednesday, July 18th.

And now, today’s special report. In a landmark settlement that will have a sweeping impact on the credit card and retail industry, Visa and MasterCard have agreed to pay more than six billion dollars to settle a massive antitrust case filed seven years ago by Irvine businessman, Mitch Goldstone, CEO and president of ScanMyPhotos. The suit alleged in 2005 that the credit card companies and some of the country’s largest banks were conspiring to unlawfully fix swipe fees for merchants. Goldstone became the lead plaintiff in the case which resulted in spending countless hours criss-crossing the country to press the case and deliver testimony during the seven-year effort. When the settlement went public last Friday, Goldstone called the news his “Erin Brockovich moment” and today Mitch is with us in the OC Metro studio to help put into perspective what this means for merchants and consumers alike.

Good morning Mitch. Welcome and congratulations.

Goldstone: Thanks Steve.

Churm: I’m certain the last few days have been a whirlwind extraordinary as you’ve been fielding multiple media requests and really talking about this important settlement so we appreciate you being with us here this morning.

Goldstone: My pleasure.

Churm: Mitch, I want to start this morning by asking you as a small businessman who launched his business two decades ago, why did you decide to take on the credit card companies?

Goldstone: Steve, it was very interesting. I was charging five dollars to scan a photo, those old photo snapshots, and with technology I was able to bring that down to just pennies per scan and it’s that same type of technology that made me curious why were the credit card companies constantly raising rates and I called up Visa and MasterCard and asked them, with my USC entrepreneur program tenacity, to lower the rates. I didn’t think it was fair. No one took my call and I started to escalate it and then do a lot of research, realizing these were cost based. Years ago, with the manual credit card imprinter reciepts with the carbon copies that had to be processed and mailed off and I realized that there was omething wrong with that. So, that’s why I took it on.

Churm: So Mitch, fast-forward for me from 2005 to the last couple of months as the settlement finally came together, what were some of the factors and ingredients that led us to last Friday or some of your feelings when you were finally able to announce it and some of the specifics behind the scenes if you will.

Goldstone: The toughest part was I knew about this last December, the dollar amount too, but it was under court seal not to discuss anything, but what this case is is the largest private anti-trust victory settlement in US history, times three. It’s that vast. What it also does is Visa and MasterCard have this huge market power, 80% of the electronic payment network was run by Visa/MasterCard networks. They could charge anything they wanted, there was very little transparancy, merchants didn’t know what costs were as well as all the other fees involved with it. Now, merchants are going to be able to surcharge. I doubt their going to charge extra for accepting credit cards but it’s primarily going to be used as leverage to keep competition up and force Visa/Mastercard to keep their rates down which is the case in other countries. In Australia, that was the case where just the threat of charging more for credit cards meant that the banks had to lower their fees and it’s very interesting to note that the banks, Visa and Mastercard, didn’t pull out of Australia. They didn’t pull out of other nations too and these fees in other nations are just about a third of that in the US and Canada. Pin based debit cards have an interchange fee of zero and the banks haven’t pulled out, their still making boatloads of money up in Canada.

Churm: If I’m an individual merchant and I’m watching this and I understand there may be something coming to me, how will that work?

Goldstone: Merchants will be contacted. Anyone that acceptd Visa or MasterCard between January 1, 2004 and beyond will be contacted to be a member of the class and all of those merchants who opt-in to the class will be getting part of the money and the money is just vast. Seven and a quarter billion dollars. The best way for a merchant to calculate it is just to take the most recent year’s total interchange fees that they pay and divide it by a third so if you had payments of about sixty thousand dollars, you should be getting about a twenty thousand dollar check.

Churm: There seems to be some mixed reports on how this will impact the average consumer. Do you have some thoughts about that?

Goldstone: I do Steve. The mixed reports are specifically coming from the banks and Visa/MasterCard PR machine as opposed to from reality. You know, the banks are the ones that want to consider themselves as people so this is a huge win for a hundred percent of americans, less about 10 people. And I’m interpreting that this is going to be a huge windfall for consumers in that they will ultimately be paying less because the competition in the new rules in the settlement that will be in place so consumers, cardholders are going to be reaping benefits as well, as will merchants.

Churm: You’ve been at the center of this now for seven years, what’s next for you and your growing business, ScanMyPhotos.com?

Goldstone: This has been such a large project for me for the past seven years. I’m working on several others, the most one, it’s very exciting, is working in partnership with the United States postal service where it’s a great story, they love the fact that people trust the post office with mailing their most precious possessions, photos, so they have this whole new ad campaign, video campaign, that’s in the works with ScanMyPhotos. So I’m looking forward to that an other projects like that.

Churm: Well, again, congratulations. I know this has been a life’s work and you continue to show your entrepreneurial flair, I’ve known you for a while and I’m just very happy for you and showing the courage and thank you for your initiative in seeing this through to the end. I appreciate you being here this morning, Mitch.